You have worked your entire life planning for the day that you will retire.

This life-changing event is now on the horizon and will happen in the next year or two. What do you do now?

An old adage says that we spend more time planning for a vacation than planning our retirement. Unfortunately, this is often true. Sometimes retirement sneaks up because of a change at work, in our health or some other reason. Maybe your company closed down or laid you off and you do not have any other good employment options.

Possibly there is a change in overtime rules that will have a negative effect on your pension. A serious health problem to you or a loved one could force an early retirement.

Sometimes companies offer early buyout options to older employees as an incentive to leave early.

This one-time payoff will not usually compensate to improve underfunded retirement assets that you have acquired. After taxes, they often represent only a couple of months' income.

Even when we are going to retire on our own schedule, we are often guilty of procrastinating. We do this in many financial decisions because we are afraid of change and it may seem easier to do nothing or say we will just get to it next week.

The problem is that next week may be too late. Maybe we get bad news from the doctor about an unexpected health problem. This may keep us from getting needed protection for our family.

Maybe the stock market has a major correction and our greed of trying to squeeze every penny out is costing us big time. For many people, the stock market is like someone with a gambling addiction. Just one more hand and my luck is going to change.

Sometimes people are just afraid of the unknown. Every week I speak to people preparing for retirement. Every situation is different because people have different expectations and different amounts of resources to draw from. However, they face many of the same challenges.

Number one is usually, how am I going to replace my paycheck? Will I have enough money? Can I afford health care? Can I have the retirement I always envisioned?

Income planning has to come first. Your paycheck came in every two weeks for years. You had a good idea of how much you would receive and could budget accordingly. Over the years, you got pay raises that helped you keep up with inflation. Inflation erodes your purchasing power and reduces your standard of living. This is important to everyone, but sometimes overlooked by people who receive strong pensions. If you received $32,000 per year in pension income, you would need to have $800,000 in a 401(k) plan, using the 4 percent rule, to have the same income. While most people do not have anywhere near this amount, the 4 percent rule does allow for inflation increases. Most pensions do not increase over the years. This means while you will be very comfortable in the near term, your pension dollars will not buy as many goods and services in 10 years. Most Americans bring their standard of living up to their income and do not save sufficient assets for the future.

Brokers often suggest a diversified asset allocation that will send you a check every month. Sometimes it is dividends, interest, capital gains or spending down some of your principle. This might work if the market keeps going up, but you can run out of money if it does not.

There is no guaranteed lifetime income; you are subject to sequential risk and it is not very tax efficient. Remember, the first decade of this century was known as the lost decade because the S&P had no gain for more than 10 years. That was only a couple of years ago.

Money to meet your daily living has to be “I Know So” money. It has to come in like clockwork to make your retirement less stressful. The stock market cannot do that. Many 401(k) plans do not offer options to accomplish this either. Most of these plans allow participants over 59½ to do an in-service transfer out of the 401(k). This would permit you to change some “I Hope So” money to “I Know So,” which you can depend on for your retirement income.

People should take advantage of these in-service transfers to have their income available sooner at the start of retirement. All of these financial products credit more before starting distributions and remove the risk of a market down turn between now and your retirement.

Procrastination could ruin a retirement you worked so hard to achieve. That would not seem to be fair. Planning your retirement is more important than planning any vacation. Why not treat it that way?

Gary Boatman is a certified financial planner who serves as president of the Monessen Chamber of Commerce.

---

Copyright ©2026— Trib Total Media, LLC (TribLIVE.com)

---